Sensex falls 600 pts, Nifty below 23,550: Global cues, Q3 earnings jitters among key factors behind market decline today

Sensex falls 500 pts, Nifty below 23,600: Global cues, Q3 earnings jitters among key factors for market decline today

Benchmark indices Sensex and Nifty witnessed sharp decline on January 8 as investors grew cautious ahead of the December quarter earnings season and persistent foreign fund outflows.

Weak global market trends and fading hopes of an early rate cut by the US Federal Reserve added to the pressure on domestic equities.

Sensex was down 635.61 points or 0.81 percent to its intraday low of 77,563.50, and the Nifty declined 184.25 points or 0.77 percent at 23,523.65. About 972 shares advanced, 2,391 shares declined, and 83 shares were unchanged. Broader markets also mirrored the weak sentiment, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling over 1.5 percent each.

From the 30-share Sensex pack, Zomato, Adani Ports, Titan, Tata Motors, Tech Mahindra, HDFC Bank, IndusInd Bank and Hindustan Unilever were the major laggards.

Key Factors Behind Market Decline

1) GDP concerns: India’s economic growth is projected to slow to a four-year low of 6.4 percent in 2024-25, as per government data released on Tuesday. This marks the weakest GDP growth since the pandemic year of 2020-21, which saw a contraction of 5.8 percent. The slowdown in manufacturing and services has heightened concerns over the economic outlook.

Manish Chowdhury, Head of Research, StoxBox, noted that the government’s weak first advance GDP estimates for FY25 has weighed on market sentiment today and were in line with the trajectory of RBI’s economic forecast released in December 2024. "The numbers, released ahead of the Union budget on February 1, 2025, would provide food for thought for the government to spur investments and consumption along with its commitment to maintain fiscal prudence."

2) Hopes of Fed rate cut dwindle: Stronger-than-expected US jobs data has dampened hopes of an early rate cut by the Federal Reserve. US job openings in November surged to a six-month high, driving the 10-year bond yield to 4.67 percent. “The resilience in the US services sector and labour market suggests the Fed might hold rates in January, strengthening the dollar and pushing bond yields higher,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

3) Rising Crude Oil Prices: Global crude oil prices edged higher, with Brent crude climbing 0.38 percent to $77.34 per barrel amid concerns over supply disruptions from Russia and Iran and rising demand from China. Higher oil prices weigh on India’s economy, which is a major importer of crude.

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4) Persistent FII Outflows: Foreign Institutional Investors (FIIs) continued their selling spree, offloading Indian equities worth Rs 1,491.46 crore on Tuesday. Persistent FII outflows have been a key factor dragging markets lower.

5) Q3 Earnings Concerns: The December quarter earnings season begins on January 9 with Tata Consultancy Services (TCS) set to announce its results. Subdued performance by India Inc in the previous quarter has kept market sentiment cautious. “Markets have been in a corrective phase for three months due to sustained FII selling, which started during the Q2 earnings season. We haven’t seen significant buying interest since then,” said Ruchit Jain, Vice President at Motilal Oswal Financial Services.

6) Weak Global Cues: Overnight losses on Wall Street weighed on sentiment after data showed robust US services sector activity and higher job openings, signalling fewer rate cuts in 2025. Asian markets, including Tokyo, Shanghai, and Hong Kong, also traded lower.

Broader Market Trends

The broader market slump suggests continued caution. “The correction in midcap and smallcap indices highlights investor unease. With the upcoming Union Budget and Q3 earnings, these events will likely dictate near-term momentum. For now, selective stock picking is advised,” added Jain. The Nifty Midcap 100 index’s support is seen around the 200-day exponential moving average at 54,800.

Technical Outlook

The Nifty has key support at 23,600, followed by 23,500 and 23,400. A breach below 23,500 could trigger further declines towards 23,200–23,000. On the upside, immediate resistance is at 23,850, with 24,000 being a critical hurdle. Traders should exercise caution and implement strict stop-loss measures. Overnight long positions should be avoided given the current volatility, said Hardik Matalia, Derivative Analyst at Choice Broking.

Vikas Jain, Head Research Analyst at Reliance Securities noted:

We moved from 23,500 to 24,700 levels and again reversed back near to 23,500 in the last 3 weeks on back of continuous FII selling with rupee weakness, dollar index at 52-week highs and now focus will be on the third quarter results and policy announcements of Trump with respect to tariff and Union budget on 01-Feb-2025. Technically any breach of the support zone of 23,200 will push the index lower to 21,800-21,500 levels which coincides with the long-term averages, election lows and 23.6% retracement of the previous move (7511-26277)

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